Those zeroes in sox are kind of weird.
I was going to bring up ordering modules but he only has the onboard sound with no usb.
I didn't want to dig a deeper hole .

It seems as if there is more than 1 card or a usb device. But arecord -l only reports 1.

Just thought of something.
Your hearing mic sound through laptop speakers while your headset is plugged in to the headphone jack? Or did you unplug the headphones?

I found this at a ubuntu website but I believe we did all this already.
Double checking never hurt.(not sure if xubuntu is different)

1. Open the “Volume Control” panel.
2. In the “Volume Control” panel: “Edit” → “Preferences”.
3. In the “Volume Control Preferences” panel: tick “Microphone”, “Microphone Capture”, and “Capture”.
4. Close the “Volume Control Preferences” panel.
5. In the “Volume Control” panel, “Playback” tab: unmute the microphone.
6. In the “Volume Control” panel, “Recording” tab: enable audio recording from capture.

I tried plugging my ipod into the mic spot, didn't record anything just like when I tried with my mic.
Yes I have an On/Off switch, and yes, it was on xD
I didn't have my headphones plugged in when I was hearing the sound through the speakers.
Xubuntu isn't much different from ubuntu, but we went through those steps, I think those were one of the first things we did.

Have you tried running with some other sound daemon?

$ jackd -R -d alsa -d hw:0 &
$ qjackctl
(make / break connections, and generally see what happens.)

$ lspci -n

Perhaps you have a strange card. Googling on vender:device finds an answer pretty quick most times. Not to imply in english. But you take what you can get.

I was having almost similar problem but after trying out new sound card my problem was fixed. You can try out this otherwise going to an expert seems a better idea.